Milk prices up some; dairy farmers still struggling

Gary Walts / The Post-StandardDairy farmer James Hurlbut milks a cow on the farm he and his brother, Gary, run in Mexico. They said their milk price is up a bit, but without an insurance check they received for apple damage last year, they would have to go further in debt with another loan this year. The Hurlbuts also run an apple orchard and maple syrup operation.

Mexico, NY -- Mexico dairy farmers Gary and Jim Hurlbut were making $1.03 for each gallon of milk they produced this time last year.

This year, their take is up to about $1.30 a gallon.

"We need it," Gary said. "It’s still tight, though."

While prices to Central New York farmers are up, that doesn’t mean they are doing much better now compared to last year.

And while farmers just concluded the annual Dairy Month celebration, they still have little to celebrate.

Many are drowning in debt. The Hurlbuts took out a loan for the first time ever last year just to pay bills. They’ve been lucky this year and haven’t had to go further in debt.

Other farmers have sold their farms or gone bankrupt. Local figures are scarce, but at least a few dairy farms in the four-county Central New York area have gone out of business.

Jim Barber, Farm Service Agency state executive director, said loan requests at the federal agency are surpassing last year, which was a record year.

In fiscal year 2008, the agency made 516 loans for $68 million.

In fiscal 2009, the agency’s $66 million available to loan in New York state was supposed to last through the year. The money was gone in March and was supplemented by federal stimulus money. The agency made 750 loans, either direct or guaranteed, for more than $110 million.

Barber said the agency so far this fiscal year — Oct. 1 through now — has processed 450 loans totaling more than $79 million. And the agency is out of money. The U.S. Senate has passed a bill to supply more loan money to the agency. The House is awaiting action on its bill.

"There are more applications stacked here waiting for money," he said. "We have 39 loans approved waiting on $4 million, and others to be processed."

While the price the farmers are receiving for their milk is up, it’s not up enough by most counts.

Karen Baase, dairy leader for Cornell Cooperative Extension of Madison County, said she thinks the worst is yet to come.

"Crunch time will be toward the end of the year," she said. "It’s tough. People are trying to cover what happened last year and what they’re making for their milk isn’t sufficient to carry them through this year.

"And the banks are being more selective in making loans," Baase said. "People are depleting their reserves. They’re robbing Peter to pay Paul.

The Hurlbuts were saved by a crop insurance check for apple damage from a summer 2009 hail storm.

"With that we paid off our loan from last year. If we didn’t have that, we would have had to borrow more money this year," Gary Hurlbut said.

The Hurlbuts have additional income from their apple orchard and maple syrup business. Farmers who do just dairying are hurting worse, the Hurlbuts said.

Statewide, farmers received $15.16 per hundred pounds of milk, or a $1.31 a gallon, in May. That’s about 32 percent more than in May 2009, when they received $11.43 a hundred, or 99 cents a gallon. This year’s prices, though, are down nearly 13 percent from two years ago May, when farmers received $17.43 a hundred, or $1.50 a gallon.

"This really shows the drastic fluctuations in the milk price," said Jessica Ziehm, speaking for the state Department of Agriculture and Markets. "Right now, the cost of production statewide is from $15 to $17 a hundredweight ($1.29 to $1.47 a gallon). Most efficient farms may be breaking even."

Milk prices always have fluctuated. A look at the last 20 years of prices for the Central New York area shows prices in any given year up and down. For the month of May, the prices range from a high of $19.09 per hundred pounds ($1.65 a gallon) in 2004 to a low of $11.43 last year.

The year 2007 was the best in the last 20 years, with seven months seeing prices of $20 a hundred pounds or higher and an average for the year of $19.10 per hundred pounds. The worst year was 1991, with nine months having prices less than $13 a hundred pounds. The average price that year was $11.79 a hundred.

And on top of low prices, just like last year, the cost of seed, feed and fertilizer has continued to rise, Ziehm said.

Meanwhile, consumers are paying about 8 percent more for their milk in the store. Wegmans sold skim gallons for an average of $2.69 in Syracuse and Auburn in June 2009 and it’s selling for $2.89 a gallon today.¶

Some farmers in the state are so frustrated they are planning a milk strike today.

David Fitch, a dairy farmer in the Herkimer County town of West Winfield, said farmers will dump their milk to show their displeasure with farm milk prices. He didn’t know if any Central New York farmers are going to participate.

"It’s worse than last year," he said. "Sure the price may have recovered some, but our input costs are a little higher and there is no credit out there. Now everything is on a cash basis. Some farmers can’t afford to put in their crops or are planting cheaper grasses to get by."

Fitch said farmers want the government to set a minimum price for milk of $18 for 100 pounds (11.6 gallons). That works out to $1.55 a gallon.

"We need to stabilize and bring prices up so we can hold on," he said. "Through the strike, we have to send a message that we can no longer make milk at this price. We are tired of working for nothing."

Dumping milk isn’t new. It’s been done nearly every time prices have plummeted. The most recent milk strike was just last year in Europe. Other milk dumpings occurred in August 1939 around New York state, in 1987 in New York and Maine, in 1991 in Central New York and elsewhere, in 1997 in the Midwest and South and in 2000 in Michigan and Wisconsin.

"We’ve talked about it," Gary Hurlbut said of the milk strike idea. "But I don’t know how you can afford to do it." 

DAIRY FACTS

New York is the third-largest dairy state in the country. 

Cayuga County is the second-largest dairy county in the state. 

There are 3,598 dairy farms in the five-county Central New York region, 813,364 acres in dairy farms and 88,524 dairy cows. 

Statewide, dairy is valued at $2.4 billion and accounts for more than 50 percent of the state’s agricultural value. 